Zambezia (2001), XXVIII (i).MARKET AND CHANNEL PREFERENCES OFMANUFACTURING EXPORTERS: A STUDY OFZIMBABWEAN COMPANIESZORORO MURANDADepartment of Business Studies, University of ZimbabweAbstractThis article reports the results of a study on market and channel selectionand preferences of manufacturing exporters. The main objective of the studyis to identify market and channel preferences of Zimbabwean firms. Resultsshow that exporters from Zimbabwe target their exports at developingneighbouring markets. Exporters realise there is a high probability of failureif they focus their effort exclusively at developed markets. Although developedmarkets absorb a higher proportion of Zimbabwe's aggregate exports, theytake only a very small proportion of purely manufactured exports. Channelselection and preferences show 19% of the exporters using sales offices tospearhead exports in regionalmarkets but preferring agents and distributorsin most developed markets.Namiki (1994, 30) has noted that most export marketing strategydimensions could be broadly categorised into two key components, i.e.market selection and market decision mix. Market selection can betranslated into two variables: (i) the countries exported to, and (ii) thelevel of market segmentation within these countries. In export marketing,country selection ranges from the "nearest neighbour" approach to globalorientation (Cooper and Kleinschmidt, 1985, 39; Gronhaug, 1982). Thesecond factor in export market selection portrays the degree of marketsegmentation that firms employ within their export markets. This rangesfrom selling to one market segment to a multitude of different segmentsin the foreign markets (Tookey, 1964; Sweeney, 1970).Marketing decision mix in exporting involves marketing mix adaptationpolicy, or the degree to which a firm adapts its marketing mix to foreignmarkets (Namiki, 1994, 31). In international marketing, the keyconsideration is whether the marketing strategy should be standardisedor adapted to the conditions of the foreign market (Douglas and Craig,1989). The degree of marketing adaptation versus standardisation is afunction of product, industry, market, organisational and environmentalcharacteristics (Buzzel, 1968; Cavusgil, Zou, and Naidu, 1993; Jain, 1989;Walters, 1986).6768 MARKET & CHANNEL PREFERENCES OF MANUFACTURING EXPORTERSAccording to Reid (1981,108), one can postulate that decision-makershave, a priori, a perceptual space of market possibilities that can beconsidered for foreign entry whether they subsequently do so or not.Market selection can thus be seen as a decision process which involvesnarrowing down from a considered set of markets for entry that can beregarded as part of the total market space available for future exportactivity. These market sets are determined by two types of experience:experience specific to the firm, and experience specific to the decision-maker. The firm's previous contacts with foreign markets, whether throughexporting or not and the foreign exposure of the decision-maker, arelikely to be critical in determining not only the size of various market setsbut their specific constitution. Most researchers agree that decision-makers are likely to explore first those overseas markets they perceive ashaving similarity with their home market. The principle of similitude(Jaffe, 1974) suggests that foreign entrants are likely to explore first thoseoverseas markets which, by implication, need a minimal degree of productadaptation (Kacker, 1975, 70) or pursue strategies of overseas expansionto new markets consistent with the relative ease of product modificationrequired. Linder-Burenstam (1961) and Welch and Wiedersheim-Paul(1978) have suggested that potential exporters do not confine themselvesto only making economic distinctions between foreign markets but thatother evaluative criteria specific to foreign countries may be of equalimportance in distinguishing acceptable markets.Dennis and Depelteau (1985) conclude that slow growth exportersplace greater emphasis on less-developed countries markets, while highergrowth exporters place relatively greater reliance on industrialisedmarkets. Das (1994, 29) concludes that, while exporting to other lessdeveloped countries may seem safer and easier, successful firms appearto be the ones willing to enter more competitive, developed markets.Cooper and Kleinschmidt (1985) found that exporters with a worldorientation, as opposed to reliance on a nearest neighbour, realise amore rapid growth in export sales, while Diamantopoulos and Inglis(1988) find high involvement exporters have much broader world marketcoverage.The International Marketing and Purchasing Project (IMP Group), ascited in Turnbull (1987, 123), noted that there is a marked tendencyamong many companies to obtain a small amount of business in manycountries, rather than concentrate on a few. The researchers observethat a significant proportion of companies taking part in their studytended to pursue the easy sales in a market. Rather than make thenecessary investment to establish a substantial presence in any onemarket, they prefer moving along engaging in the relatively simple deals.The researchers note that only by operating in a market can a companyZ. MURANDA 69fully understand its competition and its customers' requirements, therebyintegrating experiential knowledge into its operations.Selection of markets has also been related to strategies ofdiversification (marketing to many country-markets with no selectivity inthe apportionment of efforts) and concentration (marketing to a smallnumber of export country-markets, selectively devoting resources to asmall number of key markets). Stolper and Samuelson (1941) note thatthe total market for most types of products is too heterogeneous formarket management to derive maximum value from an analysis of it as awhole. From an export perspective, the BETRO Report (1977), in itsanalysis of British exporters, concluded that some of the successfulcompanies tend to concentrate (as a matter of conscious policy) on a fewproducts or a few markets. Piercy (1981, 32-33), in another study ofBritish exporters, found that firms marketing mainly in response tounsolicited orders (mostly, passive exporters) did make up a largerproportion of market concentrators than market spreaders. This provideslimited support for the expected finding that reactive exporters wouldadopt market spreading and active exporters would be associated withmarket concentration. However, he goes on to note that it seems activeexporters exported to a large number of markets to gain adequate exportvolume, but they tend to concentrate most efforts on a much smallernumber of most important markets. He concludes that it seems passiveand active exporters do not differ widely in their choice of export strategyalthough there are some differences in the reasons for the choices made.On channel selection, researchers have found that performance inexporting is strongly linked to the kind of relationship developed betweenthe exporter and overseas agents and distributors. This relationship is,in turn, related to certain characteristics of participant companies, i.e.,their stake, experience, and the amount of uncertainty involved in therelationship. Research notes that the destination of exports affects thetype of channel strategy utilised by exporters. According to Cannon(1980, 40), the distance and alien nature of many overseas markets hascreated a situation in which, at home, many firms are actively engaged inpromotion and selling, but abroad, they often rely more heavily onindependent distributors or agents. Chan (1984, 19) examined the exportstrategy of Hong Kong firms in clothing and electronics and concludedthat firms tended to perform an increased proportion of export channelfunctions for existing channel intermediaries as a response to increasesin export markets competition and trade restriction. He also observedthat firms switch their channel structure from indirect exporting to moredirect forms of exporting as a response to changes in the export marketsenvironments.70 MARKET & CHANNEL PREFERENCES OF MANUFACTURING EXPORTERSDirect exporting arises when the manufacturer performs the bulk ofthe export channel functions itself through its own export department athome, deals directly with foreign-based intermediaries, and/or establishessales subsidiaries in foreign markets. On the other hand, indirect exportingoccurs when the manufacturer's products are sold in foreign markets butno special activity for exporting is entered into by the firm. The exportermainly exports through domestic-based intermediaries in this mode. Astrong relationship has been noted to exist between channel directnessand higher export profitability. This is attributable to better control andhigher involvement by the exporter in the distribution channel. Whencompanies have sufficient resources to afford the more direct methodsof reaching their overseas markets, they tend to use more such channelintermediaries. Smaller firms tend to rely more on indirect methods ofexporting (Chan, 1992, 20).METHODOLOGYThis study was a wide industry wide survey covering manufacturingexporters in Zimbabwe. It was conducted during the last quarter of 1999.Study variables tested in this research were derived from relevantliterature based on export studies conducted in other countries and fromcommon experiences of exporters in Zimbabwe and other countries.Significance of this studyThis study addresses one of the most significant areas in relation to thefuture economic development of Zimbabwe. For a long time, businessesin Zimbabwe have focused on the domestic market, paying little regard toopportunities in international markets. The manufacturing sector is nodifferent. However, the sector has seriously suffered from loss of domesticmarket due to depreciating purchasing power yet, ironically, some firmshave remained intransigent in the face of these losses.Research objectivesThe objectives of this study are:i. To investigate market selection and entry preferences of Zimbabwe'smanufacturing exporters,ii. To investigate channel preferences of Zimbabwean manufacturingexporters,iii. To investigate the relationship between market and channelpreferences vis-a-vis export growth and performance.SamplingAll sampling units interviewed in this study were from a single industry.The purpose behind selecting a single industry was to minimise sample2. MURANDA 71heterogeneity, which could significantly diminish the power of empiricalfindings and study implications. The focus was on manufacturingexporters. The general population was 461 firms. The sampling framewas derived from the Zimtrade1 database. The source however, alsocomprised companies not involved in export operations although theyare into manufacturing.For a firm to be part of the sample it had to fulfil the followingcriteria:i. a manufacturing firm exporting directly to its client(s) in anothercountry or countries; and/orii. a manufacturing firm exporting through an agent and/or distributorand/or some such other intermediary to another country or countries;and/oriii. a manufacturing firm which has a subsidiary in a foreign country or isin a joint venture with a manufacturing partner, or has a sales office ina foreign country through which it exports.When the above criteria were applied to the 461 companies, only 200companies emerged as the target population. The general populationtherefore comprises 200 companies that are exporting and 261 that aspireto export but had not exported anything at the time of conducting thestudy according to the Zimtrade database. Although all the 200 companiesinvolved in exporting at the time of the study had been targeted as thestudy sample, only 124 participated in the study. Refusals on grounds ofconfidentiality were the main reason for failing to interview the other 76.The response rate in this study was therefore 62%.Data CollectionA structured questionnaire was used to collect the data. The questionnairewas pre-tested in five in-depth interviews with marketing managersresponsible for export operations. Based on the pre-test, revisions weremade to the questionnaire to ensure there was adequate content andconstruct validity in each of the questions in the questionnaire. Thereliability of the scales used was evaluated on the basis of the Cronbachalpha. All the scales used in the questionnaire had to have a Cronbachalpha value greater than 0.50. (The Cronbach alpha is a coefficient formeasuring internal reliability of measurement scales such as those foundin a questionnaire).Pre-test was only limited to five companies because the pre-testtarget had been predetermined at 2.5% of the total sample. Interviews1 Zimtrade is Zimbabwe's export agency. It operates as an autonomous arm of the Ministryof Industry and Commerce.72 MARKET & CHANNEL PREFERENCES OF MANUFACTURING EXPORTERSwere conducted over a period of four months, with each interview lastingapproximately 45 minutes to one hour. Companies interviewed werelocated in different towns in the country. Respondents interviewed in thestudy were either chief executive officers or marketing executives whoknow about export operations of the company. Attention was paid toidentifying the most knowledgeable individual in the firm to provide therequired information. First, questionnaires were sent to the companies tobe involved in the study. This was followed by a telephone call to eachcompany seeking an appointment. Secondary sources provided substantialbackground information for the study.Variables and .operational measuresVariables focused on in this study are:a) Market selection preferences; andb) Channel selection preferences.Dependent variableThe major dependent variable used was export performance. Exportperformance is conceived as the accomplishment of strategic as well aseconomic objectives (Cavusgil and Zou, 1994, 1). Export performancewas derived from a constellation of factors rather than a singlemeasurement. The factors used to define export performance were i.)export sales volume; and ii.) exports as a percent of total sales during1998. The assumption used in coming up with this criterion was that thetwo factors had equal weighting in the combination. Profit as a variable isnot included as a performance measurement due to problems such asdifferent accounting systems (Banhardt, 1968) used by individualorganisations in coming up with the final profit figure. Companies tend tovary quite significantly in terms of factors charged to operating profitbefore coming up with the net profit hence the decision to leave out thatfactor.Traditionally, export performance in export studies has beenmeasured by a single variable, i.e., export intensity. This measure hasbeen found to provide "a good indication of both how deeply involved afirm is in exporting and how successful the firm is at exporting" (Axxin,1988, 61). Research concedes the usefulness of such a single measure forsuch a multidimensional activity is overvalued and may be misleading.There appears to exist a convergence on the conclusion that studieswhich measure export performance along a continuum of success orthose that propose a multidimensional approach reflect an improvementover the categorical approach, since a single measure for export activitymay indeed be misleading (Reid, 1981, 104; Aaby and Slater, 1989, 16).Z. MURANDA73Operational modelThe model in this study postulates that market selection and channelselection have a combined influence on level of export involvementcommitment by a firm. The level of firm commitment to exporting has adirect impact on export strategy hence the performance (See Figure 1below).Figure 1:MODEL OF MARKET AND CHANNEL SELECTION INFLUENCE ONPERFORMANCEMarketSelectionk\ChannelSelectionLevel ofExportInvolvementŁExportStrategyPerformanceMarket selection involves selecting the target countries to which thecompany intends to export. Implied in the country-market targetingprocess is the targeting of a specific market segment. Markets that aretargeted can be both in the developed or developing countries. Thetargeting process presumes the exporter has conducted a marketassessment and is therefore satisfied with its potential performance.Channel selection involves selecting the channel through which theexporter is going to penetrate the market. The selection process assumesfocusing on a channel or intermediary that offers optimum results inreaching the end user and profitability. The process also assumes theselected channel offers minimum conflicts.Level of export involvement represents the extent to which theexporter is involved in exporting. This is measured by the export ratio.The export ratio represents the ratio of export sales to total sales of thefirm. This measurement is a relative measurement expressed in percentageterms.Export strategy is viewed in this model as the outcome of theinteraction among the three variables, i.e. market selection, channelselection, and export involvement level. Successful and/or unsuccessfulstrategies translate through the influence of the independent variableson performance.74 MARKET & CHANNEL PREFERENCES OF MANUFACTURING EXPORTERSLevel of analysisAnalysis of results in this study was mostly focused at firm level althoughgeneralisations were at sector-level. Theoretical justification for firm-level analysis is in the theory of internalisation (Buckley and Casson,1985; Rugman, 1981), which proposes that, in an imperfect market,companies should internalise the firm-specific advantages, both tangibleand intangible, to extract maximum economic rent. This study deliberatelyavoided using the individual product-market level as the unit of studydue to attendant problems associated with tracing the strategic line andthe corresponding behaviour of the firm on each individual product.Results in studies conducted using firm level as the entity of study showreliability and are, therefore, generalisable.HypothesesThe following hypotheses are proposed:HI: The transaction frequency of manufactured exports to lessdeveloped countries (LDCs) is higher than frequency withdeveloped markets.H2: Manufacturing exporters in LDCs prefer to use indirect rather thandirect channels in exporting.H3: Manufacturers in LDCs follow domestic competitors to traditionalmarkets where products from the exporting country already havea positive image as a risk hedging mechanism.Analysis and interpretationResults in this study were measured using frequency and the Spearmancorrelation coefficient (Ps). The analysis in this study deliberately used aqualitative approach rather than a quantitative approach. The Spearmancorrelation coefficient had to have a significance level of p<. 0.05 towarrant further investigation and thorough discussion.FINDINGSMarket selection and diversityResults in this study show that a high proportion of manufacturing exportdestinations of Zimbabwean products are developing countries. In theprofile of destinations, developing countries constitute 57% whilstdeveloped countries comprise 43%. Although there is higher transactionfrequency between Zimbabwe and other developing markets, this doesnot correspond to total exports value contributions. Data from the ReserveBank of Zimbabwe reveals that, as at end of 1998, developed markets thatare Zimbabwe's trading partners were absorbing 48% of the country'stotal exports, while the developing markets (all being neighbouring2. MURANDA 75countries) were absorbing 32%. The last 20% are thinly distributed amongvarious other markets (Reserve Bank of Zimbabwe, Weekly EconomicHighlights, 1999, 1). The pseudo-contradiction between having a biggernumber of developing markets as destinations but absorbing a smallervalue of Zimbabwe's exports and, on the other hand, a smaller number ofdeveloped countries absorbing the larger value proportion is a result ofthe product composition and transaction size involved. A large componentof Zimbabwe's exports comprise primary commodities. By their nature,primary commodities involve large transactions. The destination of thelarge component of the country's primary commodities is the developedmarkets. Manufacturing exports are mainly being targeted to thedeveloping markets because this is where they can enjoy reasonablecompetitive advantage. Technological superiority of developed marketsmakes them virtually impenetrable by exporters from developing markets.Highly competitive markets such as UK, USA, Germany, Japan, Italy, andthe Netherlands absorb between 40% and 50% of all Zimbabwe's exportsdestined for the developed world. Few manufactured exports, notablytextile and clothing, have however, managed to establish stable marketniches in developed markets. Eighty percent of the developing markets inthe destination profile are neighbouring markets within the SouthernAfrica Development Community (SADC) or in the Common Market forEastern and Southern Africa (COMESA). Table 1 below provides theprofile of Zimbabwe's export destinations and the frequency a country-market is reported by respondents as a destination.Although Zambia and Malawi lead the table in the profile of transactionfrequency and popularity among exporters as destinations formanufactured exports, they place third and eighth in aggregate termsrespectively as per 1998 national trade data. Notable in the table is that,of the top ten highly frequented destinations, only UK is a developedmarket. There is therefore a concrete tendency by Zimbabwe'smanufacturing exporters to target markets of comparable size especiallyAfrican markets or economically weaker markets. Apparently, this is adeliberate strategy based on the logic that manufactured exports stand abetter chance of penetrating or establishing long-term markets in par orweaker destinations. Also of the top ten most frequented markets, onlyKenya and UK are not within the SADC regional block or neighbours.These results further strengthen the observation noted above: exportersprefer targeting markets of comparable size, or comparablecompetitiveness. But beyond this is the fact that popular destinations aremainly neighbouring markets. In interviews, companies were asked, ifgiven a choice, whether they would prefer focusing on developed marketsor developing markets or balance their choice of destinations. Responsesshow 40.3% preferring developing markets and 21% developed markets.76 MARKET & CHANNEL PREFERENCES OF MANUFACTURING EXPORTERSTable 1PROFILE OF MANUFACTURING EXPORT DESTINATIONSCountry/marketMalawiZambiaSouth AfricaBotswanaMozambiqueNamibiaUKTanzaniaDRCKenyaGermanyUSAUgandaAustraliaMauritiusSwedenGhanaFranceNetherlandsItalySwitzerlandMalaysiaAngolaNigeriaEthiopiaSwazilandChinaJapanDenmarkBelgiumCanadaAustriaPortugalHong KongSeychellesThailandNumber of exportersto market908363593722181716131086553332222222222Frequency (%)18.416.912.912.07.64.53.73.53.32.72.01.61.21.01.00.60.60.60.40.40.40.40.40.40.40.40.40.40.20.20.20.20.20.20.20.2Source: Survey resultsZ. MURANDA 77The remaining 38.7% prefers to balance its market portfolio. The commonreasons advanced for preferring developing markets are two pronged: (a)developing markets are more lucrative than developed markets; and (b)targeted developing markets are closer to home. The main reasonadvanced for preferring developed markets is that of prompt payment. Aclose scrutiny of these responses shows that most exporters regarddeveloped markets as dicey and too competitive. Buyers in the developedmarkets are regarded as extremely mean. They attempt to squeeze theexporter of all the margins thus rendering export business to developedmarkets a loss maker in the end. When analysed, this reason, in conjunctionwith one of the minor reasons proffered that exporters from developingcountries are not treated as equal business partners by clients indeveloped countries, then it becomes clearer why most would rathertarget other developing markets.Exporters were asked if they have marketing plans ready to enternew export markets and which markets they are targeting. Fifty-fivepercent responded in affirmative and 44% indicated they have no suchplans. Of particular note is the fact that of the targeted potentialdestinations, 58.6 % are developing markets and these are markets alreadybeing exported to by other manufacturers from Zimbabwe. The remaining41.4% is targeting other traditional markets mainly in Europe and NorthAfrica. Other than a single mention of the Gulf States by one exporter, allthe other potential targets are already export destinations of Zimbabweanfirms (See Table 2). There is no indication of an intention to pursue othermarkets such as those in South America or expanding into new marketsin Asia other than following counterpart domestic exporters intotraditional regional, European and North American markets. It isconvincingly clear that this is a risk hedging mechanism. Exporters appearcomfortable using information from other domestic exporters to decidewhich markets have a low risk factor and are penetrable. They appear tocompare their competitiveness at home against that of othermanufacturers who have established successful export markets beforedeciding to venture into new markets. If other domestic exporters aredoing well in a given export market it tends to attract other hesitantexporters to follow suit. A very negligible proportion of the exporters inthe study are prepared to enter completely new markets with 'exotic'conditions not known to experienced exporters. This tendency confirmswhat has been proposed in the psychic distance model by researcherssuch as Kogut and Singh (1988), Benito and Gripsrud (1992, 464) andJohansen and Vahlne (1992, 13).78 MARKET & CHANNEL PREFERENCES OF MANUFACTURING EXPORTERSTable 2POTENTIAL EXPORT MARKETS TO BE ENTERED BY EXPORTERS INTHE NEAR FUTURECountry No. of potential new entries Frequency (%)15.312.710.29.35,56.85.14.24.24.22.52.52.51.71.73.83.83.83.83.83.83.83.81.81.8Results in the study also show a tendency toward marketconcentration by manufacturing exporters. (Concentration is beingoperationalised as one to five markets/countries. Diversification is beingoperationalised as six markets/countries and above). The mean numberof export markets for the whole group is four. This tendency is alsoobserved in the allocation of sales among market destinations. Exportersallocate a higher proportion of their sales to developed markets ininstances where the market portfolio comprises both developed anddeveloping markets. New market additions show no shift in strategy fromconcentration to diversification or from developing towards developedMozambiqueMalawiSouth AfricaDRCBotswanaZambiaTanzaniaUKNamibiaKenyaGermanyUSAGhanaMauritiusUgandaSwedenSwitzerlandDenmarkMalaysiaChinaNigeriaCanadaEthiopiaPortugalGulf StatesSource: Survey results1815121110865553332211Z MURANDA 79markets. On the influence of size on market selection, researchers hcvoconcluded that:Small firms tend to choose soft markets where conditions of entry areeasy because of bilateral agreements, preferential tariffs, and paymentsagreements, and the larger firms are more likely to be found in hardmarkets where entry is conceivably more difficult (Hirsch and Adar,1974).Channel selectionResults in the study reveal a strong tendency toward preferring directexporting by manufacturers. Nineteen percent of the respondents havesales offices in their export markets. The distribution shows focus onneighbouring markets, which corroborates the observation that there ismore interest in exporting to neighbouring markets than to distant marketsas long as the neighbouring markets are lucrative enough. Table 3 showsthe distribution of sales offices in the export markets.Table 3CountrySouth AfricaMalawiZambiaBotswanaMozambiqueNamibiaTanzaniaSource: Survey resultsResults show a trend in which more export business is generated inmarkets hosting more sales offices. As seen in the Table, moremanufacturers have sales offices in South Africa than any other market.In aggregate terms South Africa is Zimbabwe's biggest trading partner inthe region, thus the distribution. Interestingly the further the distance ofan export market the lower the number of companies with sales offices inthe market. Respondents were also asked if they use agents anddistributors as intermediaries. Fifty three percent said they did. An analysisof the markets in which exporters use agents and distributors showssimilar trends of concentrating marketing effort on neighbouring markets.Use of agents and distributors shows Zambia, Malawi, South Africa,Botswana, and Mozambique constituting 66.4% of the responses. Whilethere are no sales offices located in developed markets, agents anddistributors are widely used in UK, Germany, USA, Australia, France, andFrequencies12975521(%)29.322.017.112.212.24.92.480 MARKET & CHANNEL PREFERENCES OF MANUFACTURE 3 EXPORTERSSweden. A negligible proportion of exporters deal directly with the finalconsumers and this is confined to exporters of very expensive equipment.CONCLUSIONSResults in this study reveal three outstanding conclusions, namely:a) Manufacturing exporters are more focused on developing markets inthe region than on developed markets.b) A new manufacturing exporter is likely to enter a developing country-market as a matter of priority than a developed market.c) Channel preferences show use of sales offices concentrated exclusivelyin regional markets. Although agents and distributors are also widelyused in developing markets, their use is skewed toward developedmarkets.Although in aggregate terms the country exports more to developedmarkets, most of Zimbabwe's manufacturing exports are destined fordeveloping markets. The main preference is neighbouring markets withinthe SADC regional block. Although there is no blanket trading agreementamong regional countries in trade, bilateral agreements could be attractingfocus on the region. The regional preference is strengthened by the factthat developing markets are regarded as more profitable than developedmarkets. They are also seen as relatively flexible in negotiations thantheii developed counterparts. The question of proximity to top marketsalso plays a crucial role in the selection of market destinations. BecauseZimbabwe is landlocked, the issue of proximity is an important factor inthe export decision.The exporters are likely to start exporting by seeking to market inother developing markets. A simplistic assessment of this behaviour isthat the new exporter feels less burdened in terms of the risk of failurecarried than entering developed markets at time of entry into exporting.Although developed markets operate on bigger transaction sizes comparedto developing markets, the risk of sales returns is much higher than indeveloping markets especially neighbouring markets whose conditionsare much closer to ours.Channel preferences are mainly also quite closely associated withwhether the target market is developing or developed. Sales offices areconcentrated in neighbouring markets because of the higher transactionfrequency between the exporter and the clients. Foreign agents arecommonly used in developed markets. Close analysis reveals the use ofagents and distributors in developed markets is based on the fact thatthese intermediaries remove a lot of burden from the exporter becausethey tend to approach the exporter with concrete business. 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